ADW Tax Bill Introduced in Kentucky House

Legislation that would impose an excise tax on advance deposit wagers made by Kentucky residents was introduced in the state House of Representatives Jan. 9.

The measure, which has five sponsors in the House including Democratic House Speaker pro tempore Larry Clark, calls for an excise tax of one-half of 1% to be placed on “all advance deposit wagering licensees” as governed by Kentucky statute.

The state’s general fund would get 15% of the excise tax, according to the bill. Racetracks and horsemen would split the other 85% under Kentucky statute.

In a statement, Clark said there would be “no increase in fees or taxes to customers of ADW companies,” which indicates the ADW providers would have to pay. He also said the bill has nothing to do with expected legislation on expanded gambling in Kentucky.

“Even though this ADW issue is related to the issue of gaming generally, we as a legislature can still pass this bill to target one particular problem area without affecting the gaming debate,” Clark said. “Gaming will receive its due consideration this session, but I think it’s important that we pass this bill independent of that debate.”

The legislation states that any ADW licensee that fails to pay the tax could have its license suspended, revoked, or not renewed. The Kentucky Horse Racing Commission is in the process of licensing ADW providers under a law that passed in 2011.

The ADW tax became an issue because under Kentucky statute wagers through such services bypass the Kentucky Thoroughbred Development Fund. For instance, bets made through ADWs, even if the bettor is located at a Kentucky track, bypass the KTDF, which is in need of revenue.

Republican Sen. Damon Thayer, like Clark, has weighed in on the ADW issue. Thayer has said he’d like revenue from any tax to be used to support the KTDF.